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Global bond yields hit 2008 highs, raising stakes for big borrowers

reuters.com

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Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#141

Post by rdm_blackhole »

stymaar wrote: post #103
rdm_blackhole wrote: post #18

France is in a dire situation right now. 10y OAT are at 4.5% and rising with almost 100bps difference with Germany and no budget for 2027 since there is no majority in the parliament. There is also a 6% deficit expected and growth has been revised down to 0.4% although during the first 6 months of 2026 there was actually a decrease of 0.2% of GDP in total so finishing the year in recession is totally possible. Unempl…

And don't expect any debate on economic policy in the next presidential campaign either… It's just going to be “should we tax the billionaires” vs “should we save a few basis points of GDP in pensions”, none of which is remotely close to the order of magnitude that's needed to put the country back on its feet.

I am not expecting anything. I left France a long while ago and I am not planning on coming back anytime soon except for holidays.

> the order of magnitude that's needed to put the country back on its feet

The amount of reforms needed in France could fit in an encyclopedia. LFI or the RN will not fix this mess and the center who has been in power for 10 years is all but useless. The old center-left and center-right parties have all been in power also and led us to this place which means that are not the solution either.

Seems to me that France is well and truly stuck on a slow but certain decline. But the other EU countries are not doing much better either.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#142

Post by mono442 »

danans wrote: post #9
pjc50 wrote: post #6

The war(s), especially with the impact on pipelines and the Houthis taking over more of Yemen, are finally affecting fuel prices and hence turning the global economic outlook less positive. You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining.

> You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining. What's different between the two is that apparently China hasn't made an equivalent dent in its oil reserves, despite no significant reduction in travel, and despite reducing its import demand by 1 OPEC. It's not entirely clear how - but theories include shifts from flights to train travel…

EVs are a minority in China outside of a few biggest cities.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#143

Post by 05hundred »

malfist wrote: post #139
chollida1 wrote: post #121

Earlier quoted context omitted.

> Italian and Greek bonds now have lower yields/rates (i.e., considered lower risk(?)) than US bonds That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk. You can't really compare bonds that pay in different currencies by Rate alone.

Why not? Percentage is the same for dollars as it is for yen or franks or pesos

Well for one thing, different currencies have different rates of inflation. If one currency has 10% inflation and another has 1%, the second countries bonds at 5% will have a higher real return than the first, even if the risk of defaulting were the same, so the first country will have to offer a much higher coupon to find any buyers.

Also governments can influence demand, e.g. by mandating banks or pension funds buy their bonds, thereby pushing yields down, without changing the risk of default.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#144

Post by rdm_blackhole »

malfist wrote: post #139
chollida1 wrote: post #121

Earlier quoted context omitted.

> Italian and Greek bonds now have lower yields/rates (i.e., considered lower risk(?)) than US bonds That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk. You can't really compare bonds that pay in different currencies by Rate alone.

Why not? Percentage is the same for dollars as it is for yen or franks or pesos

The eurozone countries' bond rates are distorted by the Euro.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#145

Post by eggplantemoji69 »

Curious to see what transpires with federal fund rate alteration in the acute future.

Both Warsh and Bessent are pupils of Druckenmiller, but Warsh seems aligned with Druckenmiller regarding letting the market naturally settle on appropriate bond yields, whereas Bessent is being a Trump puppet and attempting these various failed interventions to artificially lower yields.

I hope Warsh stays strong and doesn’t bend the knee!

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#146

Post by rdm_blackhole »

sph wrote: post #78
method_capital wrote: post #7

Earlier quoted context omitted.

Working is an interesting term (which I agree with btw) because place like Japan with debt at 200%+ of gdp, rates rising are going to annihilate spending in other important areas. Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly? Maybe we should consider the possibility that there is no such candidate, or if there is, they cannot compete against the 'populists'. What then?

> they cannot compete against the 'populists'

You have to consider the fact that the populists are only popular because all the other parties in the last 20 years have made endless promises to the voters and failed to accomplish a tenth (if I am being generous) of what said they would do.

At some point, the blame as to lie also with whoever came before them too.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#147

Post by seanmcdirmid »

Cruncharoo wrote: post #77
seanmcdirmid wrote: post #69

Earlier quoted context omitted.

Is the euro doing or expected to do something strange?

Not sure, not my domain. My comment was just highlighting that comparing the yields on two sovereign bonds with the same maturity doesn’t necessarily mean one is riskier than the other, there are other factors.

The main complaint from Greece and Italy has been that Germany (and maybe even France) demanded (and got) strong monetary discipline for the Euro, so I'm pretty sure that the Euro itself isn't going to affect their debt much.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#148

Post by smallmancontrov »

sfblah wrote: post #137
smallmancontrov wrote: post #71

Earlier quoted context omitted.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

I don't actually think this interpretation is correct. ZIRP was the government printing money and buying bonds off the market. I think it had more to do with velocity of money, which ordinarily would have been corrected through a recession, but the government prevented that, which will create a much bigger recession at some point in the future.

No, the fed doesn't set rates. Not by much, not for long, not without inflation taking off. In theory they chase R*, in practice they chase the 2-year. Plot EFFR and US02Y on tradingview and tell me who leads whom, and tell me what happened when the fed tried to fight the market.

For the most part, congress decides to spend a certain amount in excess of receipts, congress decides the debt, the private sector bids on the debt, and the marginal bid sets the interest rate.

When the federal reserve steps in they can use their magic balance sheet to, at great expense, tug the interest rate around a little bit. However, artificially creating ZIRP in a non-ZIRP economy would not be a little tug, it would require buying most or all of the unattractive bonds. In 2020 it would have required $25T not $4T (GFDEBTN vs WALCL in 2020). Because the sum total of their intervention was small compared to the debt sold to that point, the low-intervention approximation is correct during the 2010 ZIRP era, the "P" in ZIRP is a misnomer, and "capital had more money than they knew what to do with" is the correct read on how ZIRP happened.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#149

Post by danans »

mono442 wrote: post #142
danans wrote: post #9

Earlier quoted context omitted.

> You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining. What's different between the two is that apparently China hasn't made an equivalent dent in its oil reserves, despite no significant reduction in travel, and despite reducing its import demand by 1 OPEC. It's not entirely clear how - but theories include shifts from flights to train travel…

EVs are a minority in China outside of a few biggest cities.

> EVs are a minority in China outside of a few biggest cities

Those biggest cities are majorly influential in absolute energy demand and also patterns of use.

The second tier cities will be buying the big cities used EVs in not too long.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#150

Post by ajross »

llm_nerd wrote: post #49
ajross wrote: post #33

Earlier quoted context omitted.

> the US is catastrophically indebted Debt service costs as a percent of GDP are in fact lower than they were in the 1980's, when things came out fine. Is this the best way to run the budget? Likely no. Should we make policy changes? Certainly yes. Is the best way to drive that policy argument flinging around adjectives like " catastrophically indebted". No. If you have a suggestion make a suggestion. Screaming about…

> Debt service costs as a percent of GDP are in fact lower than they were in the 1980's This is an amazing use of the "in fact" trope, in exactly the same misleading way[1]. I talked about debt, and you casually shifted to servicing costs which presumes that rates stay historically low...when they're actually rapidly rising. Comical. In the 1980s, the debt to GDP ratio was less than half what it currently is. Rates w…

Double replying because I missed this accusation:

> It's also simply a lie

I don't know what you're trying to cite but your numbers are wrong per FRED:

https://fred.stlouisfed.org/graph/?g=1YCNz

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